Samsung Became the Third Largest Smartphone Application Processor Vendor Globally in 2019

Samsung captured the third spot for the first time in terms of Application Processor (AP) chipset volumes in 2019. Samsung and HiSilicon (Huawei) were the only vendors in the top five to see positive share growth.

According to Counterpoint Research’s latest quarterly handset report, Samsung Electronics and HiSilicon (Huawei) were the only vendors among the top five smartphone application processor (AP) makers to see positive share growth in 2019; Qualcomm, MediaTek, and Apple all saw declines (see figure 1 below).

 Figure 1: Global Smartphone AP Market Share, 2018 & 2019

Despite a 1.6%pt decline throughout the year, Qualcomm maintained its solid top spot ranking, accounting for one-third of smartphone AP shipments in 2019. The vendor enjoyed shares exceeding 30% in all markets except Middle East & Africa (MEA), where lower demand for high-end smartphones tempered demand for Qualcomm chipsets in comparison to other markets.

MediaTek also saw slight share decline in 2019 but maintained its second-place position. Continued strong performance in markets like MEA, India, and Southeast Asia – driven by demand for low-to-mid-end smartphones – helped the company to grab a one-quarter market share of global smartphone AP sales. Huawei’s (HiSilicon) share declined in many markets outside China due to the US Trade Ban, but the manufacturer offset these issues by significantly expanding presence and share domestically. Samsung performed particularly well in Europe, India and Latin America, and its share increased in other regions as well. Competition intensified in 2019, with winners continuing to get the balance right between processing speeds and price.

Samsung Electronics increased market share in many markets, especially North America and India, resulting in a 2.2% YoY increase globally in a declining market. Samsung’s focus to be competitive in both price and performance seems to have paid off. However, Samsung’s outsourcing of some A-series smartphone manufacturing to Chinese ODMs since last year will drive some share gains for Qualcomm and Mediatek. Further, the proliferation of 5G smartphones in the US and China will increase Samsung’s dependence on Qualcomm chipsets in its flagship and high-tier smartphones in the region.

Figure 2: Global Smartphone AP share by Vendor & Key Markets, 2019

At the same time, Samsung is horizontally scaling with an aim to sell its 5G SOCs to Chinese brands this year which will drive Exynos chipset volumes in 2020. Further, Samsung is also increasingly adopting its Exynos Series SoCs across its own portfolio designed and manufactured in-house for sales beyond the US, Japan, and China. This will offset the design outsource volume losses to the alternate suppliers. As a result, we estimate that Samsung’s overall share of the smartphone application processor is estimated to grow further in 2020.

As the arrival of 5G accelerates growth in 2020, 5G integrated chips (mostly sub-6GHz) will start to factor in as a competitive advantage to push the 5G across price-tiers. These chips, which combine the 5G modem and a high-performance mobile AP into a single chip, will not only take up less space within the smartphone but will also reduce power consumption by performing communication and data processing on the single chip. We estimate the cheapest 5G smartphone powered by integrated 5G SoC, as a result, to go sub-$300 in the second half of 2020 with a push by all major vendors from HiSilicon to Qualcomm to Unisoc to MediaTek to Samsung. However, we will continue to also see a two-chip (discrete 5G modem) solution in premium segment driven by upcoming 5G Apple iPhones and Qualcomm Snapdragon 8 series 5G smartphones.